Applicable large employers (ALEs) that sponsor health coverage are required to file annual Affordable Care Act (ACA) information returns with the Internal Revenue Service using Forms 1094-C and 1095-C. These forms report information about the employer’s offer of health coverage and include identifying information for employees and covered dependents, including names, addresses, and taxpayer identification numbers (TINs), typically Social Security numbers (SSNs).  

Occasionally, employers receive a notice from the IRS indicating that an employee’s name and SSN reported on a Form 1095-C do not match the IRS or Social Security Administration records. These “SSN mismatch” errors are common in ACA reporting and typically arise from data entry mistakes, name changes, or discrepancies in the employee’s records.  

While these notices can be concerning, employers should understand that they generally relate to reporting accuracy, not immigration status or employee work authorization. 

Why the IRS Sends SSN Mismatch Notices 

The ACA added reporting requirements under Internal Revenue Code sections 6055 and 6056. These provisions require employers and coverage providers to report identifying information for covered individuals so the IRS can administer the employer shared responsibility rules and determine eligibility for premium tax credits.  

If the name and SSN reported on a Form 1095-C do not match IRS records, the ACA Information Returns (AIR) system may flag the filing as “accepted with errors” or generate an error code identifying the mismatch.  

Although an incorrect SSN may expose employers to potential information-return penalties, the IRS regulations provide a “reasonable cause” process that can protect employers who make documented efforts to obtain accurate information from employees. 

The IRS TIN Solicitation Safe Harbor 

IRS regulations allow employers to avoid penalties for missing or incorrect SSNs if they follow the IRS taxpayer identification number (TIN) solicitation process described in IRS Publication 1586.  

Under this framework, employers must make reasonable efforts to obtain the correct SSN through a three-step solicitation process: 

• Initial solicitation. Employers should request the employee’s SSN at the time of enrollment in health coverage or shortly thereafter. 

• First annual solicitation. If the SSN is missing or incorrect, the employer must request the information again by December 31 of that same year (or shortly after the error is discovered). 

• Second annual solicitation. If the information is still missing or incorrect, a final request must be made by December 31 of the following year.  

If an employer follows this process and maintains records of these solicitations, the IRS generally treats the employer as having reasonable cause for the reporting error. Employers may consult IRS guidelines and regulations here. 

Practical Steps for Employers 

If your organization receives an SSN mismatch notice related to ACA reporting, consider the following steps: 

• Review the filing for clerical errors. Confirm that the employee’s name and SSN were entered correctly and match the information on the employee’s payroll records. 

• Notify the employee. If the information appears incorrect, ask the employee to verify their legal name and SSN as reflected on their Social Security card.  

• Document your solicitation.  Follow the solicitation cadence outlined above and maintain written records showing when the request for corrected information was made and any responses received.  

• Correct the filing if necessary. If a corrected SSN is obtained, file a corrected Form 1095-C (and associated Form 1094-C if required) following the IRS instructions for ACA reporting corrections. 

• Retain records. Keep documentation of your outreach and corrections to support a reasonable-cause defense if the IRS later proposes penalties. 

Avoid Overreacting 

An SSN mismatch notice should not be treated as evidence that an employee lacks work authorization. These notices simply indicate a discrepancy in IRS records and may be caused by typographical errors, name changes, or outdated records. Employers should focus on correcting reporting data rather than taking employment-related action based solely on the notice. 

Bottom Line 

ACA SSN mismatch notices are relatively common and typically relate to reporting accuracy rather than compliance failures. Employers that follow the IRS TIN solicitation procedures, request corrected information from employees, and maintain documentation of those efforts can often avoid penalties for reporting errors. 

If you have questions about ACA reporting requirements or how to respond to an IRS notice, consult with your payroll provider or experienced employment counsel.